Line of credit vs term loan💰 -Sponsored by Flow Digital and Pipedrive

Getting to your question is what's the difference between a line of credit and a term loan? Term loan is where a bank basically gives you a chunk of money. Say let's say you have to buy a piece of equipment and you get a half a million dollars, a million dollars and they give you front the whole thing and then they say pay it over 3 years, 5 years, seven years. So you're making principal and interest payments every month to pay it down. Over there you have the money up front. You can't access that money anymore. You're spending it for whatever it is that you needed money from. Then they have to make the payments. So there the banks want to see if the business has the ability to make the monthly payment. Line of credit is uh gives you access to cash for when you need it and then be smart as see cash comes in bring the line down. So now you have access again. Obviously at some point when your business grows to a certain level where your line is not enough to to help you then you go to the bank to get an increase. Got it.